By Paul E. Davis
Special to North Carolina Construction News
Over the years, the construction industry has sought the most cost-effective and efficient tools to resolve disputes. We commonly utilize litigation, arbitration, mediation, and dispute resolution boards to resolve disputes arising both during and after project completion.
Now, we can add Collaborative Law to that list. The North Carolina Legislature recently enacted legislation adopting the Uniform Collaborative Law Act. House Bill 32. 2020 N.C. Sess. Law 65. This Act becomes effective on Oct. 1, 2020. North Carolina joins 19 other states and the District of Columbia that have adopted this Act. Legislation is pending in five other states.
The collaborative law process has been described as a “structured, voluntary and non-adversarial approach to resolving disputes based upon cooperation between the parties, teamwork, full disclosure, honesty, integrity, respect, civility, and parity of costs.” Collaborative Law: It’s Here and The Consensus docs are, too, Construction Law Journal, Texas Construction Law Section Feb. 1, 2016.
The collaborative law process has been used to resolve family law disputes in North Carolina and throughout the country for many years. Legislation permitting the use of collaborative law to address family law disputes in North Carolina was enacted in 2003.
A feature of the collaborative law process that makes it particularly useful in resolving family law matters is that it provides the parties the opportunity to resolve their disputes in an environment of cooperation and civility. When a marriage ends the parties often need to continue to work together, for example to raise their children. While the marriage may have ended, the former spouses’ “relationship” has not.
The construction industry is all about relationships. Relationships between the project owner and its designers and contractors, and between the contractor and its subcontractors and suppliers. It is not uncommon for these relationships to exist for many years moving from project to project.
Resolving disputes through the collaborative process provides the parties the opportunity to preserve relationships that might otherwise be irreparably harmed in the adversarial venue of arbitration or litigation.
When a dispute does arise often the first thought is to go to one’s respective corner, wait for the bell, and come out punching. With what outcome? There is a winner. There’s a loser. There may be neither a winner nor a loser, but we can be certain of two things regardless of the outcome – blood will be shed and the combatants will not take home all of the prize money.
The direct costs of litigation and arbitration can be considerable. Then add all of the indirect costs – time away from projects, diverting resources, and just the everyday distractions of the ongoing litigation or arbitration.
The collaborative law process offers another option that affords the parties greater control over the dispute resolution process. As with other forms of ADR, the collaborative law process is designed to allow the parties to control the cost, the timing, and the outcome, but in an environment that promotes cooperation.
The components of the collaborative law process include:
- Identification of shared goals and individual interests. The process is needs-based rather than positional-based. Instead of making demands on each other, the parties identify their needs and their interests to be addressed. For example, rather than a subcontractor demanding $500,000 from the contractor for the latter’s breach, the subcontractor may state its need as being able to make payroll.
- Full and candid disclosure and exchange of all relevant information. Instead of costly and time-consuming depositions and written discovery (primarily interrogatories), the parties determine what information is truly needed to understand and resolve their dispute and how that information will be shared.
- Generation of possible solutions to the shared problems and the individuals’ needs
- Evaluation and selection of proposals
- Commitment to honest, good faith negotiations
While the collaborative process is ongoing, the parties agree not to initiate or pursue litigation or arbitration. The civility and professionalism necessary for this process to be effective also requires the parties’ and lawyers’ agreement to not take advantage of known mistakes, errors of law or fact, miscalculations, or other inconsistencies. If a participant discovers a mistake, error of law or fact, miscalculation, or other inconsistency, the participant must identify it and provide the other party an opportunity to correct it.
Perhaps the most appealing feature of the collaborative law process is the opportunity for structured problem solving before the parties have put on their gloves and begun readying for a fight; before they have become entrenched in their positions.
For the collaborative law process to be fruitful requires a commitment to the process and the belief that there does not always need to be a winner and a loser. There must be a recognition that there is a problem to be solved, not a battle to be won.
Paul Davis is a construction lawyer with Conner Gwyn Schenck PLLC, based in Raleigh. He concentrates his practice in the areas of construction arbitration and litigation and contract drafting and negotiation for public and private clients, including general contractors, construction managers, and subcontractors. He can be reached by email at pdavis@cgspllc.com or by phone at (919) 789-9242 (Ext. 2343).